GuySuCo is a perfect example of why govt. needs to get out of the business of running corporations

May 15, 2011 Letters

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Dear Editor,
I was encouraged to see that a political candidate had the courage and vision to touch one of the sacred cows in Guyanese politics, sugar. David Granger in his address to the business community stated that if elected he would put an end to government corporations, including GuySuCo.
The hysteria over the announcement in certain quarters is no surprise, given the fact that these entities have been used by politicians for political patronage for many years. In the case of GuySuCo it is no secret that the ruling PPP has entrenched support from a large segment of sugar workers. Throughout the years the party using its surrogate Guyana Agricultural and General Workers Union (GAWU), has kept this segment of the population under its thumb and exercised little or no economic foresight to enact the necessary diversification and innovations to keep the industry viable.
Let me say that those who are quick to criticise this announcement need only look to the improvements and the strides we have made in telecommunications in Guyana, after that industry was privatized. It is clear to a layman like me, that lacking competitive pressures government corporations are well known for their low rate of innovation, adaptation, and introduction of new technologies. GuySuCo is a perfect example of why government needs to get out of the business of running corporations.
The Board of Directors (all political appointees), runs GuySuCo as a political organisation for their supporters and not purely as a business. In 1990 the sugar industry wages were $980 million, but after the contracting of Booker Tate to run the company, they raised the sugar workers salaries to $2.7 billion in 1991, a nearly 300 percent increase. In 1992 the sugar workers salaries were doubled again to $4.8 billion dollars; the PPP after getting into power continued to award more increases which raised the industry wage bill to $12 billion dollars by the year 2000.
In 2002 GuySuCo’s Chairman warned that employment costs were so high that the viability of the industry was threatened, but that warning fell on deaf ears and the escalation continued. The industry wage bill in 2006 climbed to $16.6 billion and since 2001 the sugar industry wage bill has amounted to over 63% of total cost.
Mr. Editor, add to this the fact that because of poor management of resources (both financial and human) estates are not given the resources they need to do capital works. Several factories like Albion in 2005 requested $529 million to do its capital works and were only given $183 million; Rose Hall requested $414 million and was only given $193 million. This pattern of management has forced estates to become less productive and the industry as a whole, less competitive.
The production figures and the cost of production tell the story, GuySuCo announced in 2007 that in order to stay competitive they would have to keep the cost of production at 12 cents per pound, but they failed miserably at this; Skeldon 30 cent/lb. Albion 19 cents/lb, Rose Hall 19 cents/lb, Blairmont 18 cents/lb, Enmore 17 cents/lb. LBI 26 cents /lb, Wales 23cents/lb, ICBU 41 cents/lb; that Mr. Editor is not the report card of a well run corporation, and this is only the tip of the iceberg.
Mr. Editor along with the huge wage increases and the failure to keep the cost of production down, the industry was forced to reduce the work force by 10, 000 workers between 1998 and 2008, but by reducing the work force so drastically they created a huge void which continues to plague GuySuCo to this day. What is amazing and defies economic logic, is that even though they reduced the work force form 28,000 in 1992 to around 14,000, plus an estimated 4,000 casual workers, the wage bill still keeps rising while the price of sugar is falling. Mr. Editor, the GuySuCo Board strategic plan, wrongly predicted that the sugar protocols and the preferential price for sugar could not be removed by the European Union; this was the first of many mistakes that led to projects like the Skeldon expansion project, which were based on faulty predictions of the industry and market trends. So while Trinidad, Jamaica and other APC countries that read the situation right were diversifying and minimizing their industries, we were expanding ours with money we did not have; almost US$200 million for the new Skeldon Estate and another US$12.5 million for the (Project Gold) packaging plant at Enmore.
Mr. Editor, the Government in Guyana is too big (25 ministers), too inefficient, corrupt and totally without vision. For 45 years government run corporations have failed to deliver efficient services to their customers and have put a strain on the already scarce financial resources of the country.
To combat this the government has saddled taxpayers (and potential investors) with a repressive Value Added Tax (VAT) 16%; personal income tax 33.33%; corporate tax 45%; The electricity corporation has failed to provide its customers with adequate, reliable power, despite huge capital and other investments, Guyana remains
the only country in this hemisphere where blackouts are a way of life. The water corporation is just as inefficient as the electricity corporation, in this the land of many waters. The Chronicle is operating at a loss and has to be subsidized by taxpayers.
Mr. Editor it is time for leadership with bold vision that can take us beyond the narrow confines of the coastal strip and into the hinterland cities waiting to be built. It is time for a well developed mineral industry and a diverse agricultural industry that can produce value added products, and new well paying jobs.
Mechanization of the sugar industry and the production of ethanol with the co-generation of power to improve profitability would place a privatized GuySuCo in a competitive position. Mr. Editor this is the way of the future, this is the path that would lead us to modernity that has eluded us for many generations.
Labour and the business community must embrace this vision, and educate the workers on the benefits of privatization and the new opportunities in the drinking water industry, aquaculture, and alternative energy sector and hinterland development. This is the way of the future.
Mark Archer

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